Chinese exporters fear new wave of exchange rate fluctuations_1468
Posted on: May 12, 2011 at 6:22 pm
Lian points out that China, the world’s third largest economy and one of the fastest growing, is important to a global recovery.
Blaming the RMB rate for the huge U.S. trade deficit is unjustified because the Chinese currency has gained more than 21 percent against the U.S. dollar, but U.S. trade deficit is still “unsolved,” Lian says.
Chinese officials have resisted calls to revalue the yuan, promising a stable policy environment for businesses, including a stable exchange rate.
by Wang Pan, Chen Siwu & Lin Jianyang
Cao Xiaojian, deputy general manage of Jiangsu SAINTY International Group, recalls the huge demand: “At that time, the U.S. dollar symbolized ‘strength and scarcity’, a position that is completely unlike now.”
Those 2004 contracts would worth less than 1.4 million yuan with the present yuan-dollar exchange rate.
Chinese economic resilience will lead to more Chinese imports from the United States, Europe and Japan, which would help those economies, he says.
His success resulted in him becoming general manager of a pottery company based in Kunming, capital of southwest China’s Yunnan Province. But his initial profits now seem like a hard act to follow.
“This is a huge change,” says Professor Xiao Yaofei vibram five fingers kso, an international trade expert at Guangdong University of Foreign Studies. “So it is with Western countries’ attitudes towards the Renminbi.”
GUANGZHOU, Nov. 14 (Xinhua) — When Zhu Bin first showed his handcrafted ceramics at the 2004 China Import and Export Fair in Guangzhou, he signed export contracts worth more than 200,000 U.S. dollars, in excess of 1.6 million yuan then.
“Only a stable exchange rate can make it easier for companies to assess manufacturing costs discount coach handbags, accept orders and map out production plans,” he says.
“Before June last year, we had mistakenly believed that the dollar-yuan rate wouldn’t break the seven mark. As a result, our company lost 20 million U.S. dollars.”
In July 2005, China started building a more resiliently managed RMB exchange rate mechanism based on market supply and demand and adjusted in relation to a basket of major foreign currencies.
The appreciation had been disturbing, sometimes, for Cao Xiaojian until the global financial crisis in October 2008. Thereafter, the yuan has largely fluctuated between 6.82 and 6.89 to the U.S. dollar.
Today, after almost a year with a relatively stable yuan-dollarrate, Cao and other business people fear the prospect of new fluctuations amid a new wave of calls by Western economies for yuan appreciation.
“At the same time, the RMB exchange rate should also keep basically stable so our export companies and other manufacturers can reasonably foresee future circumstances,” he said.
“A devalued U.S. dollar means greater risks and trouble for exporters,” Zhu says. “Before 2005, I didn’t have to worry about RMB exchange rate fluctuation, but now things are different.”
Some economists argue that a stable yuan is good for China and many other economies, at least for now.
According to the People’s Bank of China, the central bank, China’s foreign currency reserve exceeded 2.2 trillion U.S. dollars by the end of September.
“If we were to close down trade with China through some ill-begotten trade legislation or currency adjustment, we don’t save the deficit. It just goes somewhere else. And they usually go to a higher-cost producer, which taxes the American public,” Roach said.
From 2005, Cao says exporters had to consider many elements and work extremely carefully. “A minor mistake could cause huge losses.”
For almost eight years, the dollar’s value against other currencies has fallen at an average annualized rate of 3.5 percent, a point exporters want to press when U.S. President Barack Obama visits China.
Lian Ping, chief economist of the Bank of Communications, China’s fifth largest lender, says a basically stable exchange rate is extremely important since China’s export industry and the entire economy is recovering on a “fragile foundation.”
In April 2008, the RMB fell below seven to the dollar and surprised Cao and his company, one of China’s largest textile exporters.
Before the Chinese government switched the Renminbi, the Chinese currency, from the U.S. dollar peg to a basket of currencies in July 2005, the greenback had the Chinese nickname, “meijin”, or “beautiful gold,” as acquiring dollars was like prospecting for gold.
For a decade and a half after China launched the reform of foreign exchange administration systems in 1978, acquiring U.S. dollars was top priority due to the country’s trade deficit and shortage of foreign exchange reserves.
Xiao says China’s efforts to hold a stable RMB-dollar exchange rate during the 1998 Asian financial crisis earned high marks from Western governments 5 fingers shoes, who switched to pressuring China to let the yuan appreciate.
Stephen Roach, chairman of the Asia branch of U.S. banking giant Morgan Stanley, agreed in an interview by the U.S. Council on Foreign Relations’ website, saying the RMB exchange rate issue was “a red-herring.”
The RMB has since gained more than 21 percent against the greenback.
Zhu says he is still in the “gold-digging army,” but the pressure to remain competitive is mounting as exporters find their goods more expensive due to yuan appreciation and the impact of the economic crisis on global monetary systems, the U.S. dollar in particular.
Cai Minqiang, president of Guangdong-based clothes manufacturer Famory, says his company managed to survive falling overseas orders thanks to a basically stable yuan.
Chinese Commerce Minister Chen Deming said last week that China’s macro-economic, including fiscal and monetary, policies would remain stable.
“But many exporters can’t weather another round of currency fluctuations,” he says.
From Bedfocus Dexter Season 5, post Chinese exporters fear new wave of exchange rate fluctuations_1468
Posted on: May 12, 2011 at 6:22 pm
Lian points out that China, the world’s third largest economy and one of the fastest growing, is important to a global recovery.
Blaming the RMB rate for the huge U.S. trade deficit is unjustified because the Chinese currency has gained more than 21 percent against the U.S. dollar, but U.S. trade deficit is still “unsolved,” Lian says.
Chinese officials have resisted calls to revalue the yuan, promising a stable policy environment for businesses, including a stable exchange rate.
by Wang Pan, Chen Siwu & Lin Jianyang
Cao Xiaojian, deputy general manage of Jiangsu SAINTY International Group, recalls the huge demand: “At that time, the U.S. dollar symbolized ‘strength and scarcity’, a position that is completely unlike now.”
Those 2004 contracts would worth less than 1.4 million yuan with the present yuan-dollar exchange rate.
Chinese economic resilience will lead to more Chinese imports from the United States, Europe and Japan, which would help those economies, he says.
His success resulted in him becoming general manager of a pottery company based in Kunming, capital of southwest China’s Yunnan Province. But his initial profits now seem like a hard act to follow.
“This is a huge change,” says Professor Xiao Yaofei vibram five fingers kso, an international trade expert at Guangdong University of Foreign Studies. “So it is with Western countries’ attitudes towards the Renminbi.”
GUANGZHOU, Nov. 14 (Xinhua) — When Zhu Bin first showed his handcrafted ceramics at the 2004 China Import and Export Fair in Guangzhou, he signed export contracts worth more than 200,000 U.S. dollars, in excess of 1.6 million yuan then.
“Only a stable exchange rate can make it easier for companies to assess manufacturing costs discount coach handbags, accept orders and map out production plans,” he says.
“Before June last year, we had mistakenly believed that the dollar-yuan rate wouldn’t break the seven mark. As a result, our company lost 20 million U.S. dollars.”
In July 2005, China started building a more resiliently managed RMB exchange rate mechanism based on market supply and demand and adjusted in relation to a basket of major foreign currencies.
The appreciation had been disturbing, sometimes, for Cao Xiaojian until the global financial crisis in October 2008. Thereafter, the yuan has largely fluctuated between 6.82 and 6.89 to the U.S. dollar.
Today, after almost a year with a relatively stable yuan-dollarrate, Cao and other business people fear the prospect of new fluctuations amid a new wave of calls by Western economies for yuan appreciation.
“At the same time, the RMB exchange rate should also keep basically stable so our export companies and other manufacturers can reasonably foresee future circumstances,” he said.
“A devalued U.S. dollar means greater risks and trouble for exporters,” Zhu says. “Before 2005, I didn’t have to worry about RMB exchange rate fluctuation, but now things are different.”
Some economists argue that a stable yuan is good for China and many other economies, at least for now.
According to the People’s Bank of China, the central bank, China’s foreign currency reserve exceeded 2.2 trillion U.S. dollars by the end of September.
“If we were to close down trade with China through some ill-begotten trade legislation or currency adjustment, we don’t save the deficit. It just goes somewhere else. And they usually go to a higher-cost producer, which taxes the American public,” Roach said.
From 2005, Cao says exporters had to consider many elements and work extremely carefully. “A minor mistake could cause huge losses.”
For almost eight years, the dollar’s value against other currencies has fallen at an average annualized rate of 3.5 percent, a point exporters want to press when U.S. President Barack Obama visits China.
Lian Ping, chief economist of the Bank of Communications, China’s fifth largest lender, says a basically stable exchange rate is extremely important since China’s export industry and the entire economy is recovering on a “fragile foundation.”
In April 2008, the RMB fell below seven to the dollar and surprised Cao and his company, one of China’s largest textile exporters.
Before the Chinese government switched the Renminbi, the Chinese currency, from the U.S. dollar peg to a basket of currencies in July 2005, the greenback had the Chinese nickname, “meijin”, or “beautiful gold,” as acquiring dollars was like prospecting for gold.
For a decade and a half after China launched the reform of foreign exchange administration systems in 1978, acquiring U.S. dollars was top priority due to the country’s trade deficit and shortage of foreign exchange reserves.
Xiao says China’s efforts to hold a stable RMB-dollar exchange rate during the 1998 Asian financial crisis earned high marks from Western governments 5 fingers shoes, who switched to pressuring China to let the yuan appreciate.
Stephen Roach, chairman of the Asia branch of U.S. banking giant Morgan Stanley, agreed in an interview by the U.S. Council on Foreign Relations’ website, saying the RMB exchange rate issue was “a red-herring.”
The RMB has since gained more than 21 percent against the greenback.
Zhu says he is still in the “gold-digging army,” but the pressure to remain competitive is mounting as exporters find their goods more expensive due to yuan appreciation and the impact of the economic crisis on global monetary systems, the U.S. dollar in particular.
Cai Minqiang, president of Guangdong-based clothes manufacturer Famory, says his company managed to survive falling overseas orders thanks to a basically stable yuan.
Chinese Commerce Minister Chen Deming said last week that China’s macro-economic, including fiscal and monetary, policies would remain stable.
“But many exporters can’t weather another round of currency fluctuations,” he says.
From Bedfocus Dexter Season 5, post Chinese exporters fear new wave of exchange rate fluctuations_1468